Wednesday, February 15, 2006

"The accelerated sales pace of recent years has all but ended, and we're returning to a more normal market," said the association's president, David Wluka. "Our strong seller's market has been replaced with a more balanced one that will help stabilize home prices."Wluka is predicting continued moderation in prices. He said demand should remain high because of low mortgage rates and a bigger supply of unsold homes. Pardon my ignorance, but exactly how will the increasing supply of unsold homes spur demand? This is realtor reasoning at its most wishful and non-sensical."Prices may soften, but look for flat to modest appreciation this year rather than sharp price declines," Wluka said.

At least he didn't invoke the "soft-landing" phrase. Now that we've heard the spin, how about a dose of reality. Here's a look at YOY appreciation rates for the last 6 quarters, as reported by MAR:

Headed for a soft-landing? Looks more likely that the MA market is headed for a crash-landing.

7 comments:

While typically not buying into RE spin, it's possible that this scenario comes to pass (though I don't follow it).

Appreciation goes to zero (prices flat, or even slightly down). This is not a calamity as there is still a lot of equity out there.

More people put houses on the market, and well financed renters on the sidelines get interested. There are many people out there who have held off because the "it's not the money, it's what you get for it" factor.

Thanks again for the best blog with real numbers, so rare in an era of spin.

Following up on real numbers vs. spin: "U.S. Census Bureau put the homeownership rate at 69 percent in the fourth quarter of 2005" -- instead of defining ownership as anyone with a zero-down IO mortgage -- it would be nice to find statistics on the fraction of housing that is owned not owed. I would not be surpirsed if we are hitting historic lows with this more appropriate measure.

It seems that the "balanced" market is not quite as balanced yet, as a 10% reduction on a 60% overpriced property is still way overpriced. Also Renting, what incentives for a buyer is there if there is no appreciation? With prices so high, how many people can actually afford to live within their means in a house, and not count on the home ATM?Remeber that it is the buyers at the fringes that set pricing. If there are no buyers, properties just stay on the market, while accruing expenses. Unless sellers really drop prices to entice buyers in a falling market, then buyers will keep being on the fringe. Granted that inventory in my neck of the woods has not moved either way in 3 months, remaining around 300, but that is almost 2% of the town for sale at one time!

NOTE: I'd like to send the message below privately, but don't know how to reach you.

-----------------------------Dear fellow Boston bubble blogger,

Over the past few months, I've made a couple of posts to your excellent blog about getting together OFFLINE with other bubble bloggers in Boston / New England. Does getting together for one or both of the proposed events below make sense to you and your readers?

Several Boston bubble bloggers will be meeting tonight at the Starbucks (Mass. Ave & Wendell St.), and then walking a couple of blocks to the Berkman Center at Harvard for their Thursday evening blogger group.

Tonight's guest speaker from Newsvine should help all of us get more visibility for our individual blogs and enhance our mutual goal of informing consumers about real estate market trends in Greater Boston / Massachusetts.http://blogs.law.harvard.edu/thursdaymeetings/

2nd Bubble Blogger meeting: Reviewing & analyzing MAR stats

The Mass. Association of Realtors will be releasing their data on January sales on Tuesday, January 28th. Should we get together the same day or the day after to review and analyze their statement and what some on now commonly calling their "spin'?

I think we should invite the public to participate in this meeting, and even extend an open invitation to MAR, real estate professionals, and sellers who do NOT think there is a real estate bubble.

Ideally, we could meet somewhere with a wifi connection for laptops. Better still would be a venue, like Berkman, that allow would enable us to project a wall-sized image. I have a projector and screen, any suggestions for venues?

1. Cambridge: Darwin's, wifi but no projection screen room2. Doubletree hotel on 128 near MAR (would require fee of about $150, but we might be able to get a sponsor)3. Others....?